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lagging wages: stunning revealations behind the numbers in the american paycheck. in today's cover story, home prices are finally inching upwards. how a surge in buyers is changing the market. plus, a bull and a bear share their thoughts on shying away or going all-in on stocks. and, the wall street firm hiring heroes. first business starts now! you're watching first business: financial news, analysis, and today's investment ideas. good morning. it's wednesday, may 1st. i'm angela miles. in today's first look: will april investment showers bring may dollars? the dow gained 1.8% in april, as did the s&p 500. it was the 6th
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month in a row the s&p has added points. gold had its largest loss in months, losing 7.8% in april. on tuesday, the major indicies all rallied, with the s&p closing at an all-time high. gold was up $8. oil pushed down $1.48. in its call on summer gas prices, aaa predicts we'll pay around $3.20 at the pump - the lowest amount in 3 years. and yahoo is out with a new set of perks for employees. it reportedly includes 8 weeks of paid maternity leave, picking up the tab on take-out and dry cleaning, and benefits for workers' pets. larry shover of sfg alternatives joins us now. larry, we are ahead of the fed. do you anticipate that the market could tread water here into that meeting? - you know, it probably will. nobody is really expecting the fed to do anything, but they are
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hoping for a change in vernacular, meaning acknowledging that the labor market is frustrating, acknowledging that the most recent growth figures have been really soft, and perhaps giving some guidance to what they're going to do in the future. - symantec, the software company that works with security software, had a mini glitch yesterday. the stock fell from $24 all the way down to $21. they're calling it a mini stock crash. the company says there was nothing erroneous about it, it was just poorly executed. but is this unsettling to traders? - it is very unsettling to traders, because we are so used to technology or algorithm flash crashes. this could very well be a market order where somebody just wanted to sell their holdings, and because of that- we are just not used to seeing that. we're used to people putting limits on their stock, especially big orders like the one we saw yesterday. - what about the apple bond
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sale? should people be buying these bonds? would you? - i would definitely buy a bond from apple, given the amount of cash they have and the history they have and the great valuation the company has. but, i do think i can get my alpha, or my return, a little bit better than that. but if you are going to park your money into cash or an equivalent, it makes a lot of sense with a company like apple. - thank you, larry. - you're welcome. in our cover story, encouraging signs that the housing market is improving: higher home prices, particularly in communities hardest hit when the housing bubble burst. in some places, it's even leading to lotteries where there are far more eager buyers than available homes for sale. in all 20 cities where the s&p case-shiller home price index measures the strength of the housing market, home prices grew an average of 9.3%, the biggest annual jump in six years. "finally, 2013 is the year we see new construction jobs." in phoenix, prices are up 23%; las vegas, up 17.5%; and atlanta, 16.5% - big gains offset in part by much smaller increases in cities such as chicago, where real estate
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broker glen salem says the slight uptick has sellers hopeful but also holding out. "sellers are holding off. they think they'll get more if they wait six months." that's why a lot of home buyers and sellers are eagerly waiting for what the federal reserve has to say on interest rates today. "twenty-somethings that moved in with their parents, they're leaving and buying their first house." right now, a small inventory but more buyers has meant quick sales - sometimes after one day. another concern for brokers: if a shadow inventory of bank-owned homes floods the market. "it would certainly make our job difficult if there was more distressed inventory on the market." overall, home prices are still
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below where they were at the time of the housing meltdown. but for now, demand is starting to grow. in south florida last weekend, developer gl homes held a lottery to decide priority for lots. president obama says he's still confident he will get action out of congress on some of his big-ticket agenda items, including immigration. "i feel confident that the bi- partisan work has been done on immigration reform and will result in a bill that passes the house and gets on my desk. and that's going to be an historic achievement." the president made the remarks at a white house news conference tuesday. tech companies spent nearly $14 million in lobby efforts to expand temporary visas and green cards to workers. on the other side, the real conservatives national committee sent out this media release warning that any repbulican member of the house or senate who votes for this gang of 8 immigration bill will feel the heat of grassroots conservatives. also at the news conference, the president told reporters he's continuing to talk to congress about ending sequestration. and, a huge chunk
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of healthcare reform is already working, with americans able to get coverage even with pre- existing conditions and young people able to stay on their parents' insurance through the age of 26. union steel workers in south milwaukee have rejected a new six-year contract with caterpillar, but will not walk off the job. the vote means slightly more than 800 workers who build mining equipment could face a lock-out by caterpillar. no word yet when negotiations will resume. workers faced having their wages and pensions frozen and paying more for healthcare in exchange for greater job protection from permanent layoffs. the labor department reports a weak improvement in american wages. wages rose point 3% in the first quarter, the smallest gain in a year. bob bruno, an employment labor relations professor at the university of illinois, says the numbers are likely to continue to be disappointing. "no, this isn't a blip, this
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looks like more of a really entrenched situation. we havent seen wages move much at all, they haven't moved for a number of years. in fact, if you go back to the early 70's, you'll see that there's actually been a loss of actual earning power." bloomberg news reports the average ceo salary is 204 times higher than the average employee - a 20% jump since 2009. in the 250 companies it looked at, there were 8 cases of ceos making 1000 times more than an average employee. blackstone group is pledging to hire 50,000 military veterans. the firm's ceo, steve schwartzman, said this week that hiring will span across its portfolio companies over the next five years. schwartzman noted that veterans are "reliable, motivated and trustworthy employees." it's part of the 'joining forces' initiative by the white house, led by michelle obama and jill biden. blackstone is the latest
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company committed to helping veterans. target, wal-mart and home depot have pleged similar initiatives. another unsettling statistic from the eurozone - record unemployment. 12.1% of the population across the 17-nation region is jobless. that number tops earlier records set in january and february. the highest unemployment numbers are in greece and spain at 27.2% and 26.7% respectively. austria, germany and luxemburg fared better. the numbers from eurostat also show falling inflation, to an annualized rate of 1.2%, down from 1.7% the previous month. the combination could force the hand of the european central bank to further cut interest rates. the costs of the dreamliner groundings are becoming clearer. half of the world's fleet of 787s are operated by ana holdings and japan airlines. the companies estimate
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that the three-month suspension of the fleet will cost a combined $110 million. the airlines may ask boeing to pick up those costs. reuters reports that a source close to ana says the airline will ask boeing for a cash payment. virgin galactic is a giant step closer to space tourism. its "space ship two" took its first super-sonic flight over the mojave desert. the spaceliner broke the sound barrier, going mach-2. it reached an altitude of 56,000 feet. the company hopes to take its first tourist space flight in 2014. among "globe trekking" by corporate america, best buy is moving out of europe. the retailer will sell its stake in its european venture in a $775- million deal. however, it will stay in canada and china. meanwhile, swedish home goods giant ikea will likely be welcomed in india today. the indian government is expected to approve ikea's proposal to open 25 stores throughout the country. turning now to some earnings
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updates, pfizer was a market mover yesterday, as the drug maker reported higher profits despite competition from generics. however, it lowered its outlook for 2013. it was a strong day for avon, which posted better-than- expected results for its first quarter. ubs reported a billion-dollar profit, topping expectations. earlier this year the bank paid hefty fines due to its connection with libor manipulation. however, it scaled back by eliminating 10,000 jobs and cutting bonuses. and sirius xm radio saw a boost in volume as income and subscriber growth increased in the first quarter. "ketching up" on the latest deal, shareholders of heinz overwhelmingly approved selling the company to warren buffett's berkshire-hathaway and 3-g capital. 3-g owns burger king. berkshire is financing the deal. 3-g, famous for aggressive cost-cutting, will run heinz. the transaction is valued at $28 billion. heinz shareholders will recieve $72.50 in cash, and the company will eventually become private.
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a new gum with added caffeine is spurring an fda investigation. the food and drug administration is testing the effects of caffeine on children. it follows the release of a new caffeinated gum by wrigley. the fda says children are exposed to more caffeine than ever before. wrigley's new gum is meant for adults 25 and older, and one piece of gum contains about as much caffeine as a half-cup of coffee. there's fracking friction in california. according to the la times, lawmakers advanced a measure this week that would stop fracking until there's more research. critics claim there are too many lingering questions about environmental and health issues. representives from the oil industry say there's no negative effect. fracking involves drilling and breaking up deep rocks with water and chemicals to release oil and natural gas.
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we probably don't have to tell you, but americans are under a growing amount of stress! a professional health group estimates 70-90% of doctors visits are stress-related. "it's really difficult to say how much stress really costs us in the healthcare world, but it's huge because so much of the disease process is lifestyle-related. it's kind of a triple whammy going on here. when we're unhappy, we're also not as productive." to reduce your stress, it's recommended that you do deep breathing and set small, short- term goals. still to come, it's the bulls versus the bears. who will win you over? two traders make their case. that's later. but first, why "business as usual" could be a negative sign for small businesses. that's next with bill moller. i wanted to be in the military since i was a kid.
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i served in the united states air force. i served a total of 16 years. i was deployed 13 times. on my second deployment four bombs hit my vehicle. and at 19 years old, that was the first time i ever saw somebody die. coming back, i was raging. i started having pretty horrible nightmares. i would wake up in middle of the night sweats.
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i started drinking a lot. i felt worthless. i guess i never recognized it in myself. eventually, one day i just walked into the va hospital and said i'd like to see somebody. don't suffer alone. you've got to find that link with somebody that will make you let it go. it all starts with going to the va. there's a whole community of veterans that just want to help you out. it's for the guys who couldn't come back, you owe it to them to live well. because they're not here with their families. every month we take a look at what is called the surepayroll small business scorecard. it is kind of a snapshot as to how the economy is doing vis-a-vis small businesses, they being of course the backbone of our economy. let's take a look at the numbers for april. michael
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alter, is the ceo and president of surepayroll. to me it sounds like a willie nelson song: "stuck in neutral again..." - unfortunately we are seeing more of the same. we are seeing payrolls flat month-over-month; we're seeing a slight decrease in the hiring, the number of folks on the payroll; we are really just seeing more of the same. - we do see optimism at least in the upper 60s. that is relatively high, and it is up about 10% in the last two months. - right. it's consistent with the last two months, and we are certainly trending up from where we were. i think what we are really seeing from a small business owner's perspective is a little bit of a jobless recovery. our clients are telling us that they're seeing some revenue growth in their businesses, but fortunately for them they're seeing productivity growth at a greater level than their revenue growth. so they are able to grow their margins a little bit by not having to hire as they handle this extra revenue. - that is troubling for anybody
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who is an employee or somebody looking for work, because they want to see demand from those companies pick up, and demand for the employees to be rehired. - sure. sure. in the long term, it is definitely a challenge, because it leads to less hiring, and we need to get people employed so they can start spending money on main street again to continue to drive the economy forward. - but what comes first? i guess you might talk about what policymakers have in store, because that is a trigger for positive or negative impact here. - certainly. and we are seeing some of those challenges right now. we are seeing the effect of the sequester, we are seeing the effect of the payroll tax holiday going away. i think right now small business owners are realizing, "you know what? i am not here on my own. i've got to make it happen, because the government really hasn't done much." - for now though, it is the new norm. - it is the new norm. - michael alter, with surepayroll. thanks so much. - thanks for having me. still ahead, should you be bullish or bearish on this market? we'll get insights from both sides, next.
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the infamous dr. doom made a call this week that has the bulls and bears at odds. doom- and-gloomer nourieal rounbini, the economics professor at new york university who famously predicted the u.s. housing crisis, now says the federal reserve & central banks are propping up stocks & bonds, and it could last. joining us, scott bauer with trading advantage and scott shellady of trean group. scott, you are bullish on this market. is now the time to be a big bull? - i don't know if it is time to be a big bull, but it is certainly time to stay in the marketplace. it is kind of the "fool me once, it's my fault; fool me twice, it's your fault." we have seen this economic news come out over the past few months - it hasn't really been great. earnings season has probably been tepid at best. yet this market is rocketing higher. volatility is down, the vix is still trading in the low teens. there is
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really, in the next few months at least, and probably going into the fall, there aren't many signs here that the market is going to slow down. now, i am not saying going forward that some of these predictions and some of the reports that are coming out aren't going to hit this market. but for the next three to six months, it is straight up forward from here. - let's go with scott shellady. you are our bear in the house for us today. how are the bears surviving this market? - all i have to say is, something's got to give, baby. we can't have a market that is up 1.2% in april and up 12% for the year on the back of the fact that we don't have any economic news really that is going to support those numbers. so either the economy has to catch up to the stock market, or the stock market will catch up to the economy. and we all are hoping that it is the economy catching up with the stock market, that is why the fed continues to print. but the reason why we are at these levels is the fed is continuing to print, and the reason they are continuing to print is, we've got no growth. the best we
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can do is 1-2% after putting in $85 million a month to work on this economy? so the economy is still in bad shape, the 10-year yield is telling you that at 1.65%. we have had a good run-up up to this point, but something has got to give, and i think it is going to be the stock market. - quickly before we take off, scott, best place to put your money right now? - if you're looking at me, i would still be in some of the high-dividend-yield stocks, though we are seeing that really transfer over back into tech and the banking sector. - scott shellady, is it time to short? - i tell you what, i would take some profits off the table, and i would probably invest a little bit of that cash into going long the vix. i think you very much to our scotts-squared today. thanks guys. - thank you. stay with us; there's more trader talk to come! what one trader has to say about facebook ahead of earnings, and a deep play on an oil stock.
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alan knuckman of trading advantage joins us now from cme group to talk about a couple of stocks. let's start with chesapeake. what do you see in the charts with this stock, alan? - this stock has been trading between $16 and $22 since june, so it has been going sideways. a breakout on this target is $28, and it's a long-forgotten stock. we have seen a lot of these stocks - cleveland-cliffs, u.s. steel, a lot of these materials-type stocks - really have been not participating with this rally. so it is going with some out-of-favor stocks, looking for a rebound. - there was a lot of controversy about this one and the ceo. so is there a way to protect yourself in this play? - i am looking at a limited-risk option, buying and in-the-money call for january. it has nine months of time for development. the bottom of the channel is $16, so buying a $16 call for january is going to cost about $4.25. that is my maximum risk. my break-even is about $1 higher, with nine months for price development. and i think this stock has been beaten up
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and is due for a rebound. - have to mention facebook. earnings are coming up after the close. you have been a bull on this one. what do you think about earnings? - i think it is poised to make new relative highs, get back at that $38 level eventually. it has held this $25 halfway support repeatedly over the last three months. it has been rock-solid, and i think we are going to get a nice bounce from here. - alan, always good to have you. - thank you. and before we bounce out of here for today, a reminder we hope you join us tomorrow for the market fallout following the fed announcement. plus, what to expect this weekend with the opening of "iron man 3." from all of us at first business, thank you for watching.
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